HK$200m annual windfall for Hong Kong government in betting change

Jockey Club gets approval for new revenue source after 6 years of lobbying

After more than six years of Jockey Club lobbying, the Home Affairs Bureau yesterday backed the two-way combining of betting pools with foreign jurisdictions, allowing overseas punters access to the larger and more attractive pools here.

The system, known as commingling, would mean a boost of HK$200 million a year in revenue for the government on top of more than HK$10 billion it currently receives in duty from the Jockey Club.

At the moment, racing fans in Australia, for example, can watch and bet on Hong Kong's races, but their money goes into a small Australian pool. Under a commingling agreement, Australian betting operators would send those bets to the much larger and more attractive pools in Hong Kong. The same would apply to jurisdictions around the globe.

The Betting Duty (Amendment) Bill will be put to the Legislative Council in the second quarter of this year, with the new set-up to start in time for the 2013-14 season in September.

The countries that now wager on Hong Kong races pay the Jockey Club a 3 per cent fee on holdings. According to Jockey Club officials, these small, localised holdings total HK$3 billion to HK$4 billion a year globally. This figure would at least double if the same bets were commingled into the larger pools here.

Permanent Secretary for Home Affairs Raymond Young Lap-moon said the amendments would help in the fight against illegal bookmakers. "Any local bettors who used to patronise illegal bookmakers would have legal means to bet on races in overseas territories [or vice versa]," he said. He believed the new rules would not attract new gamblers on overseas racing due to language barriers and other issues.

"These are for people who are already betting on these races. They may be betting more but there should not be more people doing so."

To facilitate outbound commingling, the government has accepted the Jockey Club's proposal to apply a flat betting rate at 72.5 per cent on receipts of local bets on non-local races.

"Commingling has become an internationally adopted industry practice that enables regulated operators to work together to counter the threats posed by illegal bookmakers and junket operators," said Carmen Lok Wai-man, the Jockey Club's executive manager for public affairs.

The main sticking point in negotiations previously was the concept, accepted elsewhere, that bets are taxed only in the country of origin. Without a government concession to exclude bets from other countries placed into Hong Kong pools from the usual duty, commingling was unviable for foreign operators.